FedEx restructures fleet under US Postal Service contract

To take advantage of the expiration of a long-term contract with the U.S. Postal Service, FedEx is making a major shift in its global air cargo strategy. The shift was highlighted in the company’s latest earnings briefing, Yahoo Finance sources reported. FedEx Chief Customer Officer Brie Carere emphasized the need to disrupt the fragmented and outdated air cargo market, which the company now believes is ripe for growth potential.

Also Read: FedEx Restructures – Technology and People Challenges Prove to Intract

FedEx has reportedly adjusted its operations to reduce U.S. domestic flight hours by 24% in the second quarter of its fiscal year as the Postal Service contract moves to UPS. This is consistent with IndexBox data, showing a global trend towards optimizing logistics operations. FedEx’s revenue edged down 1% to $22 billion, while adjusted operating income fell 3% in the same period.

An important part of FedEx’s strategy involves implementing a color-coded simplification of its air network, known as “tri-color,” designed to optimize utilization of its vast logistics infrastructure. The program targets different air cargo segments, with the purple network dedicated to international parcel customers who prioritize speed and efficiency, the orange network focused on generating high freight volumes, and the white network focused on handling lower priority freight via commercial aircraft.

FedEx is optimistic about capturing a larger share of the $80 billion air cargo market, where it currently has a single-digit market share. The integration of sophisticated tracking capabilities and utilization of its less-than-truckload (LTL) network is expected to provide FedEx with a competitive advantage in this new target market.

As global air cargo demand continues to trend upward, with 11 consecutive months of double-digit growth, FedEx’s adaptability strategy may play a key role in overcoming cargo capacity constraints and capitalizing on opportunities along major trade routes.

Source: IndexBox Market Intelligence Platform